More than 5.2m Americans filed new claims for unemployment insurance last week, pushing the total in one month to more than 22m, in the latest sign of the staggering job losses from the coronavirus shutdowns.
The jobless figures follow a series of data this week that documented the magnitude of the blow from the public health crisis to all parts of the economy, with historical declines in industrial production and retail sales, and local business owners telling the Federal Reserve that economic activity had contracted “sharply and abruptly across all regions in the United States.”
The initial jobless claims total of 5.25m in the week ended April 11 was lower than the 6.62m recorded the previous week, the labour department said on Thursday. That compared with economists’ expectations for 5.5m.
“We tentatively estimate payrolls will fall by around 15 million with the unemployment rate hitting 14 per cent,” said James Knightley, economist at ING. “This would mean all the jobs gained since 2009 have been lost in the best part of a month.”
California once again reported the largest number of jobless claims at 660,966, based on preliminary state-level estimates that have not been seasonally adjusted, though that was lower than the previous week. New York, which remains the epicentre for the outbreak in the US, reported 395,949 claims.
8.2% Members of American workforce successfully filing for unemployment insurance
According to comments in the report from state labour agencies, the claims continued to come mainly from workers let go from closed restaurants, bars, hotels and shops.
The job losses are broadening out across industries, however; seven states reported a high number of claims among administrative workers, and some of the harder-hit states lost jobs in construction as well.
“The bleeding is ongoing but it’s less severe,” said Gregory Daco, chief US economist at Oxford Economics. The claims number will probably continue to fall from its highs of early April, he said. “That would be a reassuring sign that essentially not everybody’s losing their jobs.”
The initial claims data likely continue to understate the depth of job losses as there have been widespread reports about overwhelmed state-run website crashes and delays in filing claims for unemployment insurance benefits.
The number of people who have successfully filed claims and been approved for unemployment insurance, however, climbed to 8.2 per cent of the entire workforce by April fourth. That was up from 5.1 per cent the previous week.
It was also the highest rate since the department began keeping records in 1967.
Unadjusted for seasonal shifts in unemployment, the total number of people whose claims have been processed stood at 12.5m in the first week of April.
Not every worker whose claim has been processed is getting paid yet, however. “Historically, 90 per cent of those workers [would be] getting paid,” said Andrew Stettner of the Century Foundation, a non-profit organisation. He estimated that 75 per cent were now receiving payments.
“Although the system is overwhelmed,” he added, “It is working and delivering assistance as needed.”
Two separate reports on Thursday further illustrated the depth of the blow to the US economy from the coronavirus lockdowns. The rate of new home construction in the US plunged 22.3 per cent in March, the most since 1984. At the same time, the Philadelphia Fed manufacturing index, a gauge of factory activity in the US mid-Atlantic region, fell to minus 56.6 in April — the lowest reading since July 1980 — from minus 12.7 in March.
Donald Trump is expected to announce guidelines to reopen the economy later on Thursday, after claiming the US has passed the peak of new coronavirus cases.
However, on Wednesday it was announced that a record 2,492 people died over a 24-hour period — the first time new fatalities topped 2,000 for two consecutive days. The US death toll has now surpassed 28,000, while confirmed cases have exceeded 632,000.
The data were a reminder that a clear slowdown in the rate of spread of the infection was only the first stage of a long process that would eventually see the economy restored to health, said Ian Shepherdson, economist at Pantheon Macroeconomics. He also noted the need for further fiscal stimulus now that the Paycheck Protection Program had run out of money.
“There will be scar tissue for the economy, and it will take some time for Americans to return to travel, to shopping, and to their former habits,” said Jim Baird at Plante Moran Financial Advisors. “Employment conditions will heal, but that healing process is going to take years, not months, just as is always the case coming out of a recession.”
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